7 CHAPTER Understanding Finances Lesson 7 1 Finances

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7 CHAPTER Understanding Finances Lesson 7. 1 Finances 101 Lesson 7. 2 Financial Planning

7 CHAPTER Understanding Finances Lesson 7. 1 Finances 101 Lesson 7. 2 Financial Planning Lesson 7. 3 Preparing for the Future © 2013 Cengage Learning. All Rights Reserved.

Chapter 7 Investigating Your CAREER Lesson 7. 1 Finances 101 n Goals n Determine

Chapter 7 Investigating Your CAREER Lesson 7. 1 Finances 101 n Goals n Determine the difference between wants and needs. n Explain the need for checking accounts. n Explain the need for savings accounts. © 2013 Cengage Learning. All Rights Reserved. SLIDE 2

Chapter 7 Investigating Your CAREER Lesson 7. 1 Finances 101 n Terms n needs

Chapter 7 Investigating Your CAREER Lesson 7. 1 Finances 101 n Terms n needs n wants n checking account n FDIC n checkbook register n online banking n debit card n savings account n compounding interest © 2013 Cengage Learning. All Rights Reserved. SLIDE 3

Chapter 7 Investigating Your CAREER Difference between Wants and Needs n Needs are things

Chapter 7 Investigating Your CAREER Difference between Wants and Needs n Needs are things that are necessary for you to live your life. n Wants are things you desire, demand, or would like to have for reasons beyond survival and basic comfort. © 2013 Cengage Learning. All Rights Reserved. SLIDE 4

Chapter 7 Investigating Your CAREER Checking Accounts n Checks n Online banking n Debit

Chapter 7 Investigating Your CAREER Checking Accounts n Checks n Online banking n Debit cards © 2013 Cengage Learning. All Rights Reserved. SLIDE 5

Chapter 7 Investigating Your CAREER Parts of a Check © 2013 Cengage Learning. All

Chapter 7 Investigating Your CAREER Parts of a Check © 2013 Cengage Learning. All Rights Reserved. SLIDE 6

Chapter 7 Investigating Your CAREER Checkbook Register © 2013 Cengage Learning. All Rights Reserved.

Chapter 7 Investigating Your CAREER Checkbook Register © 2013 Cengage Learning. All Rights Reserved. SLIDE 7

Chapter 7 Investigating Your CAREER Savings Accounts n A savings account is a bank

Chapter 7 Investigating Your CAREER Savings Accounts n A savings account is a bank account on which you earn interest. n You can withdraw money from a savings account, but savings accounts are designed for you to save money for the future. © 2013 Cengage Learning. All Rights Reserved. SLIDE 8

Chapter 7 Investigating Your CAREER Choosing a Checking or Savings Account n Is a

Chapter 7 Investigating Your CAREER Choosing a Checking or Savings Account n Is a minimum balance required? n Are there fees for this account? n Does the account pay interest? n Are there any other restrictions on this account? © 2013 Cengage Learning. All Rights Reserved. SLIDE 9

Chapter 7 Investigating Your CAREER Compounding Interest n Interest that is calculated on the

Chapter 7 Investigating Your CAREER Compounding Interest n Interest that is calculated on the balance, additional deposits made, and interest earned Year Beginning Balance Deposit Interest Earned (3%) Ending Balance 1 $0. 00 $50. 00 $1. 50 $51. 50 2 $51. 50 $50. 00 $3. 05 $104. 55 3 $104. 55 $50. 00 $4. 64 $159. 19 © 2013 Cengage Learning. All Rights Reserved. SLIDE 10

Chapter 7 Investigating Your CAREER Tips for Becoming a Good Saver n Develop a

Chapter 7 Investigating Your CAREER Tips for Becoming a Good Saver n Develop a budget and stick with it n Save first before you consider any spending n Think before you spend—consider your needs versus your wants n Track how you spend money and review your budget © 2013 Cengage Learning. All Rights Reserved. SLIDE 11

Chapter 7 Investigating Your CAREER 7. 1 Finances 101 SUMMARY n It is important

Chapter 7 Investigating Your CAREER 7. 1 Finances 101 SUMMARY n It is important to determine and prioritize one’s wants and needs. One’s wants and needs will affect spending and savings goals. n A checking account is a safe place to keep money. It is important to keep an accurate checkbook register and review spending each month. n A savings account earns interest and helps one save for the future. Compounding interest adds up quickly. © 2013 Cengage Learning. All Rights Reserved. SLIDE 12

Chapter 7 Investigating Your CAREER Lesson 7. 2 Financial Planning n Goals n Examine

Chapter 7 Investigating Your CAREER Lesson 7. 2 Financial Planning n Goals n Examine your financial goals. n Develop a budget to live within your means. n Identify common money mistakes. n Terms n financial plan n budget n income n fixed expenses n variable expenses n credit card debt © 2013 Cengage Learning. All Rights Reserved. SLIDE 13

Chapter 7 Investigating Your CAREER Financial Goals n Develop your financial goals n Short-term

Chapter 7 Investigating Your CAREER Financial Goals n Develop your financial goals n Short-term goals (under one year) n Medium-term goals (one to two years) n Long-term goals (five or more years) n Prioritize your goals n Estimate the cost of each goal n Set a deadline for achieving the goal n Determine the amount you need to save monthly to reach your deadline n Identify what actions you need to take to reach the goal n Review your progress to ensure you are on track © 2013 Cengage Learning. All Rights Reserved. SLIDE 14

Chapter 7 Investigating Your CAREER Financial Planning n Helps you determine a budget and

Chapter 7 Investigating Your CAREER Financial Planning n Helps you determine a budget and live within your means n Personal—based on your goals n Financial plan n Blueprint containing your personal goals n Timeline for reaching your goals n Understanding of how to save to reach the goals © 2013 Cengage Learning. All Rights Reserved. SLIDE 15

Chapter 7 Investigating Your CAREER Budgeting to Live Within Your Means n Budget n

Chapter 7 Investigating Your CAREER Budgeting to Live Within Your Means n Budget n Income n Fixed expenses n Variable expenses © 2013 Cengage Learning. All Rights Reserved. SLIDE 16

Chapter 7 Investigating Your CAREER Debt n Good debt n Bad debt n Credit

Chapter 7 Investigating Your CAREER Debt n Good debt n Bad debt n Credit card debt © 2013 Cengage Learning. All Rights Reserved. SLIDE 17

Chapter 7 Investigating Your CAREER Common Money Mistakes n Emotional or impulsive spending n

Chapter 7 Investigating Your CAREER Common Money Mistakes n Emotional or impulsive spending n Persuasive advertisements or sales techniques n Buying without researching n Borrowing at high interest rates n Skipping payments on credit cards or loans n Not having a financial plan and budget © 2013 Cengage Learning. All Rights Reserved. SLIDE 18

Chapter 7 Investigating Your CAREER 7. 2 Financial Planning SUMMARY n Developing one’s financial

Chapter 7 Investigating Your CAREER 7. 2 Financial Planning SUMMARY n Developing one’s financial goals is the first step in financial planning. n It is important to develop short-, medium-, and long-term goals. It is never too early to begin financial planning. n Creating a budget will help one save money and live within one’s means. Budgets should include income, fixed expenses, and variable expenses. Total Income − Total Expenses = Savings! n Avoid common money mistakes such as carrying credit card debt, buying without researching, borrowing at high interest rates, and being an impulse buyer. © 2013 Cengage Learning. All Rights Reserved. SLIDE 19

Chapter 7 Investigating Your CAREER Lesson 7. 3 Preparing for the Future n Goals

Chapter 7 Investigating Your CAREER Lesson 7. 3 Preparing for the Future n Goals n Investigate insurance as a means of protecting what you have. n Discuss ways to save to meet your needs. n Explain ways to invest in your future. © 2013 Cengage Learning. All Rights Reserved. SLIDE 20

Chapter 7 Investigating Your CAREER Lesson 7. 3 Preparing for the Future n Terms

Chapter 7 Investigating Your CAREER Lesson 7. 3 Preparing for the Future n Terms n insurance investment n stocks n certificate of deposit n tax shelter n 529 plan n 401(k) n IRA © 2013 Cengage Learning. All Rights Reserved. SLIDE 21

Chapter 7 Investigating Your CAREER Insurance n Coverage you can purchase to provide reimbursement

Chapter 7 Investigating Your CAREER Insurance n Coverage you can purchase to provide reimbursement or replacement in the case of loss, property damage, illness, or death n Can help pay for large expenses that you would otherwise not be able to pay on your own © 2013 Cengage Learning. All Rights Reserved. SLIDE 22

Chapter 7 Investigating Your CAREER Basic Types of Insurance n Automobile insurance n Health

Chapter 7 Investigating Your CAREER Basic Types of Insurance n Automobile insurance n Health insurance n Workers’ compensation n Unemployment insurance n Homeowner’s insurance n Life insurance n Disability insurance n Long-term care insurance © 2013 Cengage Learning. All Rights Reserved. SLIDE 23

Chapter 7 Investigating Your CAREER Saving for the Future n Develop financial goals n

Chapter 7 Investigating Your CAREER Saving for the Future n Develop financial goals n Savings routine and commitment © 2013 Cengage Learning. All Rights Reserved. SLIDE 24

Chapter 7 Investigating Your CAREER Considerations When Saving for Education n Will you be

Chapter 7 Investigating Your CAREER Considerations When Saving for Education n Will you be going to school in-state or out-of- state? n Will you be living on-campus or off-campus? n Will you go to school part-time or full-time? n Will you work while you are in school? © 2013 Cengage Learning. All Rights Reserved. SLIDE 25

Chapter 7 Investigating Your CAREER Investing n Investment n Stocks n Certificates of deposit

Chapter 7 Investigating Your CAREER Investing n Investment n Stocks n Certificates of deposit (CDs) n Tax shelters n 529 Plan n 401(k) n IRA © 2013 Cengage Learning. All Rights Reserved. SLIDE 26

Chapter 7 Investigating Your CAREER Guidelines for Investing for the Future n Investigate investment

Chapter 7 Investigating Your CAREER Guidelines for Investing for the Future n Investigate investment opportunities carefully n Begin to save early n Keep saving n Diversify your investments © 2013 Cengage Learning. All Rights Reserved. SLIDE 27

Chapter 7 Investigating Your CAREER 7. 3 Preparing for the Future SUMMARY n Purchasing

Chapter 7 Investigating Your CAREER 7. 3 Preparing for the Future SUMMARY n Purchasing insurance offers financial protection. Financially, purchasing insurance is a smart move as one can get compensated for losses. Insurance should be included in every budget. n Establishing a savings routine and commitment is key to reaching one’s financial goals. The best advice is to start saving early and minimize borrowing money. n One must invest in the future. An investment is putting money into something with an expectation of a financial gain. Remember, some investments are risky and some are more secure. © 2013 Cengage Learning. All Rights Reserved. SLIDE 28